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Review law to define GNPC’s mandate - PIAC report

By: Ama Amankwah Baafi
Dr Steve Manteaw, Chairman of PIAC
Dr Steve Manteaw, Chairman of PIAC

The Public Interest and Accountability Committee (PIAC) has recommended the review of the Ghana National Petroleum Corporation (GNPC) Act, 1983 (PNDCL 64) to better define the mandate of the national oil.

This is because some of the functions performed by GNPC are now being done by the Petroleum Commission.

The PIAC says a more compelling reason for the revision of GNPC’s statute of establishment arises from the fact that by the enactment of the Petroleum  Exploration and Production Act, 2016 (Act 919), certain functions performed by GNPC in the past, such as serving as data repository and providing technical advice to the minister have now been assigned to the Petroleum Commission.

The committee made the recommendation in its eighth 2019 semi-annual report on management of petroleum revenues that covered January to June.

It includes a broad range of issues associated with the management and use of petroleum revenues such as information on production, liftings, total revenues accrued and received, allocation and utilisation of these revenues by government.

Also, it consists of the management of the funds set aside in the Ghana Petroleum Funds (Ghana Stabilisation Fund and the Ghana Heritage Fund).

Some findings
An amount of US$1 million has been budgeted towards the establishment of a fertiliser plant. However, the GNPC reports that the project is still at a desktop study stage to be undertaken with the Ministry of Food and Agriculture (MOFA), Ghana Gas and other stakeholders.

“Given the expenditure on the fertiliser plant, roads, schools, among others, GNPC appears to be over stretching its mandate by moving into areas that are extraneous to the corporation’s core mandate,” the report said.

In relation to the GNPC’s corporate social responsibility (CSR), it said a total of US$43.05 million had been budgeted in 2019 to cater for the corporation’s CSR obligations under the GNPC Foundation.

Consequently, the corporation undertook several initiatives that addressed two out of four of the foundation’s strategic goals.

These included education and social infrastructure,  health, sanitation and other facilities across the country.

The report discovered that production on the TEN Field was impacted by shut-down activities over a 14-day period from April 22 to May 5, 2019 to undertake major maintenance works and inspections.

This affected the average daily production and output of the field.

Again, there was no expenditure in respect of the Petroleum Hub in the Western Region during the reporting period.

The PIAC stated that the report was being released over a month later than the statutory reporting date of September 15, without the Annual Budget Funding Amount (ABFA) expenditure data for the period, due to the Ministry of Finance’s (MoF) failure to honour PIAC’s data request.

The committee observed that over the past three years, the MoF had been non-responsive to requests for data.

In its view, the ministry had deliberately resorted to the practice of supplying incomplete information by releasing revenue data without the expenditure component.

“On this occasion, the ministry submitted its expenditure data on October 18, 2019, to the committee, over a month after the due reporting date for PIAC. The expenditure data will, therefore, be analysed later and if necessary, a supplementary report issued,” it explained.

The committee reiterated its call for the GNPC to proactively plan to respond to cash calls when they were made in order to avoid the cost of borrowing.

PIAC recommended that the Petroleum Commission worked with the partners to put in place, a well-coordinated framework for routine shutdown and maintenance to minimise disruption to production and gas exports.

PIAC reiterated its call for the Ghana National Gas Company (GNGC) to discontinue the practice of retaining gas revenues.

“Receipts from the sale of gas must be applied to defray the cost of raw gas supplied by GNPC, for lodgement in the Petroleum Holding Fund in accordance with Sections 2 & 3 of the Petroleum Revenue Management Act, 2011 (Act 815) as amended by the Petroleum Revenue Management (Amendment) Act, 2015 (Act 893) , and in line with sound business practice,” it added.
The committee’s reports aim at keeping Ghanaians and other interested stakeholders, constantly informed on how the country’s petroleum revenues are being managed and used.

It also provides platforms for the citizens’ feedback to be collated and shared with policymakers.

Since its inception, the PIAC has published a total of 16 reports, eight annual and eight semi-annual covering the period 2011 to June 2019.